A bill on international cooperation in resolution of tax-related disputes in the EU has been submitted to the Chamber of Deputies.
The bill is an action to transpose into Czech law an EU Directive on tax dispute resolution mechanisms in the EU. The EU Directive aims for efficient resolution of disputes arising from the interpretation of income tax treaties for the avoidance of double taxation on a national and international level.
Tax treaties typically contain a clause on dispute resolution by mutual agreement or the Arbitration Convention; however, such procedures are rather time-consuming, and their outcome uncertain. The EU Directive and, in turn, the Czech proposed legislation offer clear rules and provide new legal remedies to taxpayers.
A main part of the EU Directive is a broadening of the scope of disputes to be subject to these rules. The measures would apply to any disputes arising from the interpretation of income tax treaties between EU Member States or the Arbitration Convention. The disputes would be resolved by a “harmonised procedure,” and concluded by a report on the final outcome.
For the parties to the proceedings, the bill stipulates specific time limits to complete each separate phase of the proceedings.
Apart from setting clear and legally enforceable time limits, the bill would enhance the transparency of dispute resolutions by introducing a requirement that decisions must be published. The report of the outcome of the harmonised procedure could only be published with the consent of all parties, and upon the agreement of the competent authorities.
There is also an option to publish a summary report (in an anonymous format not containing taxpayers’ sensitive data) reflecting the main conclusions of the resolved dispute. Decisions would be sent to the European Commission for publication on its website.
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